Wendy’s has announced plans to close hundreds of its locations as customers face financial pressures and reduce their dining out habits. During an earnings call on Friday, interim CEO Ken Cook disclosed that the fast food chain would be shutting down a “mid single-digit percentage” of its approximately 6,000 restaurants. This translates to a potential closure of between 200 and 350 locations, with some expected to cease operations by the end of 2023 and additional closures continuing into 2026.
The specific locations targeted for closure have not been revealed. Cook indicated that these closures aim to enhance sales and profitability at remaining restaurants. He stated, “Closures of underperforming units are expected to boost sales and profitability at nearby locations.” Last year, Wendy’s had already closed 140 underperforming restaurants, with plans to open new restaurants in more favorable locations.
On the stock market, Wendy’s shares dropped by 2.6 percent on Friday, contributing to a significant decline of 46 percent overall this year, as reported by The Wall Street Journal. This announcement follows the company’s report of a net income of $44.3 million for the last quarter, a decrease from $50.2 million in the same period last year. Cook acknowledged the financial strain many consumers are currently experiencing, particularly among lower-income demographics.
“We do see more pressure on the lower-income consumer. We continue to see that in the third quarter, and we expect that to continue into the fourth,” Cook mentioned during the call. To address budget-conscious customers, he highlighted Wendy’s Biggie Bag value meal, which includes a Junior Bacon Cheeseburger, a four-piece nugget, fries, and a drink for just $5.
The rising cost of living has become a central issue for many Americans, influencing both consumer behavior and political actions. Recently, voters in key states, including New York, New Jersey, and Virginia, expressed their concerns about affordability at the polls. The Consumer Price Index rose by 0.3 percent in September, with the annual inflation rate increasing to 3 percent. While these figures were lower than anticipated, they remain above the Federal Reserve’s target of 2 percent.
In New York City, a significant 56 percent of voters identified the cost of living as the most pressing issue in their communities, according to an exit poll conducted by NBC News. Voters in New Jersey raised concerns about rising property taxes and electricity costs, while residents in Virginia noted that federal government cuts this year have adversely affected their families’ finances.
Wendy’s is navigating a challenging landscape as it adjusts to changing consumer habits and economic pressures. The company’s strategy of closing underperforming locations may ultimately reshape its operational model in an effort to enhance profitability while addressing the financial realities faced by its customer base.
